Will new ATMs make your bank branch obsolete?

ATMs may soon issue cashier’s checks and possibly even loans

Your ATM will soon be more than just a cash dispenser—in fact financial executives and analysts say the technology may soon be able to replace some human bank tellers and bank branches.

There are roughly 425,000 ATMs in the U.S., and many of those have already gotten an upgrade—or soon will. On Thursday, Citibank
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unveiled new ATMs in the U.S. that “remember” customer preferences (like language), offer on-page scrolling (as on an iPad), let you check your balance without leaving the screen you’re on, and feature instructions that are more conversational; the new ATMs were piloted in New York City last year and will begin rolling out in other locales in February. The move is part of a larger evolution of the stalwart machines. In the past few years, Chase and PNC introduced ATMs that dispense $1 and $5 bills; Citibank and Wells Fargo began letting you get an email receipt of your balance rather than a paper one; and Bank of America and a number of credit unions began experimenting with video conferencing with a live person right on the ATM rather than keeping employees in every branch.

Banks say they’re adding these kinds of features to add convenience for consumers—a convenience that may mean that you really no longer need to wait in line to see a bank teller. Mark Gilder, director of distribution strategy at Citibank, says that while customers certainly want to speak to a bank representative on big topics like loans, they like the efficiency of the ATM for other features. The ATM is becoming full-service, he says: “We think at least 85% of the things you do at the teller, you can do at the ATM.” (Citibank is experimenting with video conferencing in Asia, as well as fingerprint authentication and applying for loans via ATM.) It makes financial sense for banks to do this: “The whole point is to drive down operating expenses,” says Ben Mazzotta, a postdoctoral research fellow at the Institute for Business in the Global Context at Tufts University. Already, at least one credit union has added ATMs that do video conferencing in the place of tellers in certain branches, which means you speak to a person via video on the ATM rather than in person.

While teller jobs certainly won’t dry up completely—people like talking to tellers for large transactions like mortgages, and some tellers may do videoconferencing—we may see more of these jobs disappear, as industry experts expect the functionality of ATMs to become more useful and, in many cases, teller-like in the future. David Tente, a spokesperson for the ATM Industry Association, says that he thinks that in addition to having video conferencing capabilities, ATMs will be able to better facilitate person-to-person transfers and other types of payments (many already let you make loan payments on-site), spit out cashiers’ checks, and allow you to make transactions without inserting a card (possibly by standing near the ATM with your mobile phone).

To be sure, you can already do most of this on your mobile phone, tablet, or computer—so why, you may ask, will you need an fuller-featured ATM? While 80% of consumer spending in the U.S. is already cashless, according to a September 2013 by MasterCard, we’re still a long way off from a cashless society; and roughly 80% of ATM transactions are to deposit and withdraw cash.

What’s more, the ATMs can—and could more often in the future—dispense physical goods to consumers. Already, some ATMs dispense stamps, lottery tickets and gift cards, says Tente. And Better ATM Services CEO Todd Nuttall, whose company enables ATMs to dispense prepaid gift cards, says that he’s been approached by transit authorities to dispense their cards via ATMs, as maintaining all those kiosks for subway, rail and other tickets is both a bottleneck and pricey. “You can deposit checks using your mobile phone, but it still doesn’t replace the ATM for physical products like cash and cards,” he says. That’s why, he says, ATMs may soon dispense more products.

They may also be used by more people in the future: Euromonitor predicts that ATM transactions will go from about $632 billion in 2013 to $874 billion in 2018. One of the reasons for this growth, says Mazzotta, is that payments from employers and governments to more and more workers will happen via debit card (rather than physical check); those people will need access to ATMs to get this money and move it around. “ATM use will rise,” he says. And so too will its functionality.

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